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b. incur and pay reasonable expenses for repair, maintenance, and operation of the PROJECT facilities herein described and such expenses as may be necessary to cure the cause of default, and add the amount of such expenditures to the principal of the loan amount; c. take possession of the PROJECT facilities, repair, maintain, and operate or lease them; d. act upon the deeds of trust, security agreement, and promissory note; e. take any other appropriate action. All remedies described herein may be simultaneously or selectively and successively enforced. The provisions of this contract may be enforced by the STATE at its option without regard to prior waivers of previous defaults by the BORROWER, through judicial proceedings to require specific performance of this contract, or by such other proceedings in law or equity as may be deemed necessary by the STATE to ensure compliance with provisions of this contract and the laws and regulations under which this contract is executed. The STATE'S exercise of any or all of the remedies described herein shall not relieve the BORROWER of any of its duties and obligations under this contract. 15. In event of a conflict. In the event of conflict between the terms of this contract and conditions as set forth in any of the appendices, the provisions of this contract shall control. 16. Pledge of revenues. The BORROWER agreeO~;1:Dific revenues to be pledged to repay the STATE shall include, but not be limited to, assas~evied f-i th.at purpose as authorized by resolution of the BORROWER. Furthermore, BORROWER ~1'1t .l.J a. Revenues for this loan are to be---~ep~t~~ BORROWER hereby pledges such revenues to repay the STATE loan, agrll'~~t these revenues shall be set aside and kept in an account separate from other BORROWER revenues, and warrants that these revenues shall not be used for any other purpose. b. Establish security interest in the'revenues. The BORROWER agrees that, in order to provide a security interest for the STATE in the pledged revenues so that the STATE shall have priority over all other competing claims for such revenues, it shall execute a Security Agreement, attached as Appendix C and incorporated herein. Furthermore, the BORROWER acknowledges that the STATE shall perfect its security interest by filing a Uniform Commercial Code Financing Statement with the Colorado Secretary of State. c. Assessments for repayment of the loan. The BORROWER shall, pursuant to its statutory authority, articles of incorporation and by-laws, and as authorized by its resolution, annually seek from its stockholders sufficient assessments, and to take all other necessary actions consistent therewith to levy assessments sufficient to pay this contract loan in a timely manner and as required by the terms and conditions of this contract. Should the stockholders fail to set any such assessments, the BORROWER shall make adequate assessments for the purpose of repaying its obligations under this contract pursuant to ~ 7-42-104(2), C.R.S. (1986). In addition, in the event the assessments levied by the BORROWER become insufficient to assure repayment to the STATE as required by the terms and conditions of this contract, then the BORROWER shall immediately take all necessary action consistent with its statutory authority, its articles of incorporation, by-laws and resolutions, including but not limited to, levying additional assessments to raise sufficient revenue to assure repayment of the loan to the STATE. Vouga Reservoir Association Page 7 of 1 2 Loan Contract